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About Me

Thean Eu

Greetings. I'm a journalist from Business Times Malaysia.
Despite the global economic slowdown, the telecommunications industry, in general, continues to capture the imagination with its potential for one billion new subscribers decades to come.
Broadband Internet penetration rates continue to rise while the impending introduction of next generation mobile services promises to revitalize a mobile market that has already reached saturation levels in a number of countries.
Hopefuly this blog will provide a unique platform for the sharing of ideas and experience from all sectors of the telecommunications and information technology industries – policy, regulatory, economic and development issues – to meet the challenge of strengthening the information society locally and other countries.

Tuesday, December 1, 2009

NOT surprising. Celcom (Malaysia) Bhd, the country's second largest mobile operator, is out performing its peers over the past quarters, especially during the economic slowdown.

For the 14th consecutive quarter, it posted revenue growth on a quarter-on-quarter basis. Even DiGi.Com Bhd couldn't do that. DiGi may have posted consecutive year-on-year growth, but definitely has not posted Q-on-Q growth (yet).

Besides sales, its bottom-line has also registered Q-on-Q growth.

Its Ebitda margin has also improved slightly against second quarter, but overall, still slightly lower than what it recorded last year.

Last but not least, its subscriber base. It has for the first time exceeded the 10 million mark. It recorded a net additions of 444,000 customers last month (net additions: new customers minus customers who left). Of which, 130,000 are new postpaid customers and 314,000 are prepaid customers.

Malaysia-based mobile operator Axiata Group Bhd. said Monday it will exceed its full-year targets after its third-quarter net profit more than doubled due to a larger subscriber base and foreign exchange gains.

"The group has seen an acceleration of performance... across all operating companies," said Axiata, which has significant operations in Malaysia, Indonesia, Sri Lanka, Bangladesh and Cambodia.

"We are confident about our prospects for the rest of the year and of exceeding our full-year targets based on the three quarters of growth we have steadily and consistently achieved," the company said in a statement.

Axiata had earlier said it targeted revenue growth of between 6% to 11%, and earnings before interest, tax, depreciation and amortization growth of between 4% to 6% and return on equity of 4% for the year.

Axiata said in a filing to the stock exchange that its net profit for the three months ended Sept. 30 rose to MYR503.7 million from MYR243.9 million a year earlier.

Revenue rose to MYR3.38 billion from MYR3.28 billion previously due to a larger subscriber base, Axiata said

The company also posted a foreign exchange gain of MYR140.0 million against a forex loss of MYR17.5 million a year earlier.For the nine-month period, Axiata said its net profit climbed to MYR1.09 billion from MYR1.01 billion a year earlier while revenue was higher at MYR9.41 billion against MYR8.93 billion previously.

The stronger performance for the nine months was primarily led by Malaysia's Celcom and Indonesian PT Excelcomindo Pratama, which recorded on-year revenue growth of 12% and 7%, respectively, due to increased subscribers, the company said.Subscriber net additions for the group as a whole were 25.3 million.

1. Hints that company will return higher dividend to shareholders. Analysts are expecting the company to return more than 100 per cent of net profit as dividend.

"We will see a generation of more organic cashflow moving forward. After 2010, capex will start coming down a bit, because we have already invested for the next stage in a big way. So, the delta between the revenue and the net cash will only increase.

"So, organically, we will continue to have a strong cashflow. We also want to make sure at most of the time, we should have an ideal balance sheet, which means we can't be sitting on cash that we did not do anything about it. Either we reinvest it or we pump the money back to the shareholders."

2. On his view of being second, behind Celcom, in terms of the mobile broadband race. (as of first half, celcom has 420,000 customers, while maxis has about 142,000)

"It's still too early to declare leadership in this segment as there's still tremendous growth potential in mobile broadband. Clearly, we want to be the broadband leader."

3. Sandip also explained what went wrong in the first quarter this year, which saw its market share declined by 1-2 percentage points. He attributed it to two factors.

b. The modernisation of its network. When upgrading work is ongoing, at some point in time, the quality of service may be affected. Naturally, when that happens, customers will reject the services, asking for refunds. So, Maxis for a while, had "freezed" its sales of mobile broadband.

He also said:

"Companies get bruised once in a while, but champions are companies that come back from such situation."

"We are now ready. We have a daily pass, a weekly pass as well as a monthly pass; it's packages for all segments. Of course, we are seeing our sales going up as well."

4. On the importance of broadband experience.

"I can stand in the middle of the street and sell 500,000 mobile broadband packs in one day. But it is pointless if the customer experience is not there."

Tuesday, November 17, 2009

AFTER all the rumours and speculation, Maxis Bhd, the country's largest mobile operator, will be listed on the local bourse tomorrow (Thursday, November 19).

For over six months, Maxis has been linked with various rumours, including:

1. Maxis-Astro merger (though some believe it is still possible)2. to merge its Indian operations with Astro's Indian operations.

Speculation intensified when PM, upon returning from Middle East in July, had suggested that Maxis should consider relisting, as it would enhance the local bourse's attractiveness. Maxis responded with "we will consider relisting" type of statement.

All speculation was put to rest when in September, when a Maxis draft prospectus was out on Securities Commission's website. Followed by the prospectus launch end October.

Anyway, below are some of the key information on the IPO:

1. The IPO, to raise more than RM11 billion, will be the biggest in Southeast Asia. At RM11 billion (approx US$3.3 billion), it is larger than the US$1.5 billion IPO by SingTel, US$1.7 billion IPO by PT Telekomunikasi Indonesia, US$1.3 billion IPO by PT Adaro Energy and the US$1.2 billion IPO by PT Indonesia Satellite.

3. It has got a revolving credit facility of RM1 billion from CIMB Bank Bhd.

4. Although 90 per cent of the 2.25 billion shares were allocated to institutional investors, several funds were unhappy with the allocation they received. Some funds were getting as low as 5 per cent of allocation. (meaning, if the fund apply for 50 million shares at RM5.00, only 2.5 million shares were allocated to the fund) Nevertheless, spoke to some fund managers working for insurance firm, it appeared that they receive bigger allocation.

In fact, in a report by The Edge Financial Daily, OSK Investment Bank appeared to have declined the 1.5 million shares that were allocated to them.

5. The IPO is expected to solve/ part solve Maxis Communications Bhd's funding needs for its Indian operation. It owns about 74 per cent stake in Aircel, which is currently the 6th-9th biggest player in India.

6. For long-term investors, they will be delighted to know that the company has a policy of returning at least 75 per cent of net profit to shareholders.

From my lunch sessions with various analysts, it appears that analysts are expecting the company to return 80-over percent of net profits as dividend. Some analysts wont be surprised if the company returns MORE THAN 100 per cent of net profits to shareholders. This means, the company may return all its nets profits, plus surplus cash, to shareholders as dividend. Of course, all these are mere speculations.

There will be a few more Maxis related posting over the next few days. Sorry for the one-month MIA, will once again, try to update more regularly from now on.

Friday, September 18, 2009

As expected, Maxis Communications will only list its Malaysian unit on the local stock exchange. It will leave out its Indian and Indonesian investments.

The IPO involve the offer of 2.25 billion Maxis Bhd shares, representing 30 per cent of its existing share capital.

As the listing of Maxis Bhd, a subsidiary of Maxis Communications Bhd (MCB), will not involve issuing of new shares, the exercise is not expected to raise any proceeds for the company. What this means is, MCB will be selling their 30 per cent stake in Maxis Bhd and they can use the money raised from the IPO for their Indian investments.

Im thrilled when the announcement came. Not because i can buy Maxis shares. But it's because the public can now get hold of their financial performance, and operational performance. (above)

Thursday, September 17, 2009

MOSCOW, Sept 16 (Reuters) - Vimpelcom, Russia’s No.2 mobile phone operator, said on Wednesday it had agreed to buy Luxembourg-based telecom operator Millicom’s assets in Laos in a further move to expand in South-Eastern Asia.

Vimpelcom, which already operates in neighbouring Vietnam and Cambodia, said in a statement it would buy a 78 percent stake in Millicom Lao from Millicom Holding B.V. and Cameroon Holdings B.V. for about $66 million.

"Vimpelcom’s entry into Laos is the next logical step in our international expansion strategy. Laos provides a great complement to our existing operations in Vietnam and Cambodia and fits perfectly into our strategy of building a solid Southeast Asian cluster," Chief Executive Boris Nemsic said.

"The growth potential in Laos is attractive, with a population of 6.5 million people and low mobile penetration estimated at around 23 percent." The company said that completion of the acquisition was subject to regulatory approval which was expected before the end of 2009.

The remaining 22 percent stake is owned by the government of Laos. Millicom said in a separate statement the deal valued the entire Laos operation at an enterprise value of about $102 million, which represents 7.5x estimated 2009 EBITDA.

Tuesday, September 15, 2009

Why is MPHB (Multi-Purpose Holdings Bhd), which has stakes in Magnum4D, wants to buy U Mobile or venture into a mobile industry?

The company announced yesterday that, it has signed a put option deal with AmBank, to buy 41 per cent stake in U Mobile for RM280 million.

KT Freetel and NTT DoCoMo, last year, jointly bought 33 per cent stake in U Mobile for US$200 million (US$100 million each), they have expressed their interests to exit U Mobile recently.

In a Reuters report, it said, NTT DoCoMo is selling their entire 16.5 per cent stake to U Television for US$100 million.

A few things that don't add up, or was not revealed:

1. Who owns the 41 per cent stake MPHB is buying? or Who are the owners of the 41 per cent stake?

2. When NTT and KT Freetel is selling the 16.5 per cent stakes for US$100 million each, how in the world MPHB is able to buy 41 per cent stake (about 8 per cent more than what the two foreign companies owned) at a huge discount?

3. If MPHB is so keen to buy a stake in U Mobile, why not buy it directly and instead, entered into a put option agreement with AmBank?

Initially, i have much more questions in my mind... but i guess i was too hungry, so no more energy to think...

A union would create Japan’s second-largest cellphone maker with sales of 505 billion yen ($5.6 billion) and could trigger more consolidation in a sector worn down from infighting in a crowded and dwindling market.

NEC, Japan’s No.3 handset maker, said it will split off its mobile phone division and merge it with a cellphone joint venture operated by Hitachi and Casio. How much the merger will save NEC has not been calculated yet, an NEC spokeswoman said.

NEC would hold 70.7 percent in the new venture, which will receive a 5 billion yen capital injection by June 2010. Casio will hold 20 percent and Hitachi 9.3 percent, the three companies said in a statement.

Japan’s mobile phone market is shrinking but phone makers are still shouldering hefty development costs, which can cost as much as 10 billion yen ($111 million) per new handset in the world’s most technologically competitive mobile market. NEC, Casio and Hitachi together controlled about 20 percent of Japan’s mobile phone unit sales in the year ended in March, according to research firm BCN Inc.

That would nudge out No.2 Panasonic Corp and come a close second to Sharp Corp, with 22 percent.

Prior to the announcement, shares in NEC closed down 2.9 percent, in line with Tokyo’s electrical machinery index. Casio fell 4.5 percent and Hitachi 4.4 percent.

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Really hope the merger goes through, and they could synergise and give rivals Nokia, Samsung, LG a run for their money.

I guess for a start, they really need to look beyond the Japan market, and start developing phones the most parts of the world. So, in that sense, the merger will help them save costs and achieve the economies of scale.

Saturday, August 29, 2009

ON AUGUST 27, Axiata Group Bhd, a mobile telecoms group, said second quarter net profit jumped 44 per cent from a year ago, driven by foreign exchange gains and a better showing by its units, especially Celcom.

The net profit of RM526.84 million is also its best quarterly performance since its listing a year ago.

Axiata, which has more than 100 million customers spread over seven countries, also thinks it can almost meet its main financial targets for this year.

It aims to grow revenue by 6-11 per cent and operating profit or Ebitda by 4-6 per cent, among others.Ebitda, or earnings before interest, tax, depreciation and amortisation, rose 2 per cent to RM1.24 billion from a year ago.

Its revenue rose by 7.8 per cent to RM3.16 billion during the period, against RM2.93 billion last year."We have many reasons to smile. All key operating companies improved quarter-on-quarter," said president and group chief executive officer Datuk Seri Jamaludin Ibrahim in a briefing in Kuala Lumpur.

It does not plan to buy Luxembourg-based telecom operator Millicom's assets in Cambodia and Sri Lanka. However, it remains open to acquisitions.

"In general, we are quite open to looking at industry consolidation. Cambodia is definitely one of them, given the number of competitors there. But, until we have a good candidate, we will proceed as it is (to grow organically)," said Jamaludin.

The company is also in active talks on the sale of non-core assets in Thailand, Pakistan and Iran although it is not in a rush to do so.For the six-month period, the group's revenue rose 7 per cent to RM6.03 billion, while net profit fell by 23 per cent to RM591 million.

Celcom, which made up half of Axiata's revenue and over half of Axiata's operating profit, also posted one of its best quarters.

"I think Celcom's segmentation approach, as well as its aggressive push for mobile broadband, are showing effects," said an analyst from a local research house.

Although currency swings are less volatile these days, Axiata said it has plans to minimise this and an announcement is expected in the near term.Meanwhile, the company said it expects the merger between Idea and Spice in India to be completed this quarter.

ON AUGUST 21, Telekom Malaysia Bhd, the country's dominant fixed-line operator, said second-quarter net profit more than doubled due tohigher unrealised exchange gain on foreign currency borrowings of RM123.2million.

The company posted a net profit of RM266 million, up from RM114.7 million (which excluded results from the demerged Axiata Group Bhd) in the same period a year earlier.

The company also added that it plans to spend RM350 million on IPTV contents over the next 3-4 years. Sounds a lot? Think again.

RM350 million over 3-4 years would represent an annual expenditure of about RM117 million a year over a three-year period or RM87 million over a four-year period. In comparision, Astro spends more than RM800 million on contents in FY2009 alone. In FY2008, it spends more than RM700 million on contents.

Does this means that TM's IPTV content will not be competitive? Not necessary. Spending less on contents will translate to higher possibilities of TM tieing up with media owners. It does not need to buy the contents (such as rights for football games). Instead, it can tie up with companies like Media Prima (which has TV3, NTV7, 8TV, etc under its belt) or Astro -- allowing Media Prima viewers or Astro viewers to watch their programmes via IPTV platform, instead of conventional platform.

Imagine, if Astro and TM tied up, allowing users to watch Astro programmes via IPTV ... This could mean that viewers can watch their favorite programmes even when it's raining.

ON AUGUST 19, Tune Talk Sdn Bhd - a Tune Group company - launched its much-anticipated no-frills mobile services.

The launch was held in a hangar in Sepang, at about 3.30pm. I must say, the place is HUGE. As you enter the hall, you have the press registration counter on the right and on the left, you can sign up for a Tune Talk number.

There could be easily 200 people attending the event. Most of the media representatives were there, there were bloggers too (although i cant identify most of them), there were many Celcom staff there as well. Also attended the event include Tune Hotel CEO Mark Lankester and Green Packet's CEO Puan Chan Cheong.

Highlights of the launch:

1. Speech by Jason Lo (CEO of Tune Talk). I must say, it's one of the longest speech i ever heard.

2. Datuk Seri Tony Fernandes giving his speech on the wing of his new Airbus.

The mobile services - which uses the 010 prefix as well as riding on Celcom (Malaysia) Bhd's network - has a few main key differentiators:

1. Call rates of 22 sen a minute. To anyone, anywhere and anytime within Malaysia. That's at least 30 per cent cheaper than the basic rates offered by most mobile operators. (basic rates exclude those Friends and Family rates)

2. Its IDD rates are about 10 per cent cheaper than most operators', it claimed. Will look into their IDD offering soon.

3. Tune Talkers may receive up to RM1 million worth of AirAsia e-gift vouchers. The vouchers will be given to the daily top 10 callers. (promotion lasts for 12 months)

4. Personal accident insurance coverage of RM100,000. (Hmmm... does it mean, im covered if i got into a car accident while talking on the mobile phone?)

However, the company does not plan to offer 3G services anytime soon. This means, Tune Talk is really focusing on offering basic services to customers. I believe the "lack of 3G" will not be a huge hurdle for Tune Talk -- because it is offering prepaid services, and let's get real, how many prepaid users (using 3G sim card) will use the 3G services (such as Internet browsing and video calls) on a regular basis?

I am sure the company and Celcom, which owns 35 per cent stake in Tune Talk, have done sufficient research before embarking on such plan.

No doubt. The 22 sen a minute offering will get people excited. The main question now is, how will DiGi and Maxis react?

Below are some of the key takeaways from the press conference:

1. To sign-up 1 million subscribers within a year.

2. To be cashflow positive within six months.

3. To secure another MVNO partnership in another Southeast Asia country within 12 months.

Thursday, August 13, 2009

WAS quite impressed with DiGi's latest offering, that is by offering unlimited music download for a small fee.

Now, for just RM5 a month, DiGi users can all the music they want, be it 1,000 songs, be it 10,000 songs, as long as you have the space.

The service is available for both prepaid and postpaid DiGi users.

During the press conference, the company was tight-lipped on its business model or revenue sharing arrangement with the recording companies. In the past, the model should be pretty straight forward, each song a customer downloads, DiGi and record labels will get a portion of the revenue.

Now, by allowing users unlimited download for RM5, how are they going to split the money?

My gut feel is, they will share the revenue for the downloads of "DRM-Free songs", DRM-Free songs are songs that can be transferred to third party. (A DRM format type of songs are not transferable, something like those songs you transferred to your iPods, you cant transfer the songs from the ipod to your laptop)

DiGi is offering users up to 5 DRM-Free songs a month. This means, they can download say, 1000 DRM songs, and 5 DRM-free songs.

Since DRM songs are not transferable, i guess the recording labels are not really at a huge lost even if the users download its entire library of DRM songs.

So, technically, users are paying RM5 for 5 DRM-free songs, and revenue sharing only happens when a DRM-free song is downloaded.

Tuesday, July 28, 2009

LAST Friday, REDtone became the country's third mobile virtual network operator (MVNO), after Merchantrade and XOX, to launch its mobile services.

Unlike its rivals, which offer the services to the end-consumers, REDtone's mobile services is only available for companies/ businesses, such as the small and medium-sized enterprises and SoHo.

Below are some of the key takeaways from the launch:1. Minimum commitment usage of RM38/ month.2. Calls among REDtone mobile network is 23 sen a minute. (includes calls from REDtone number to Celcom, Merchantrade, XOX numbers) Text message cost 10 sen each.3. Calls to non-Celcom network cost 30 sen a minute. Text message cost 20 sen each.4. Tri-lingual speeches is not recommended. Imagine listening to a speech, the same speech, same content, in three languages back to back. It just takes too much time.5. Did not reveal targets.

Anyway, another highlight that i forgot to mention is the way the company plans to "sell" its mobile services. REDtone is offering its customers airtime/ incentives each time they successfully refer one new customers to take up the mobile services. This means, if a REDtone mobile user managed to get his business partner to sign-up for the services, he/she is entitled up to 20 per cent of airtime/ rebates -- RM100 phone bill MAY be reduced to RM80. (don't have the actual pricing mechanism with me)

So, in other words, instead of depending on distributors or dealers, the mobile users will be its "sales force" as well.

Sounds all rosy. But here are a few questions:1. Why should i pay RM38 a month, when my calls cost 23 sen a minute, when what other telcos are offering much much lower? The 20 sen SMS for off-net users is just too pricey.

2. So, would a businessman, one who is aware of where each dollar and cents goes, sign up for such packages? Ideally, as a businessman, you want a mobile service that helps you save cost, that helps u save phone bill... this mobile service doesn't blend in well. Yeah, one may argue that REDtone mobile users can get "rebates" in the form of air-time, and maybe cash. As a business, as a company, do you want to spend most of your free time recruiting REDtone mobile users, or you want to spend your time getting new businesses, new sales lead for your own company?

Friday, July 24, 2009

DiGi.Com Bhd, the country's third largest mobile operator, recorded a 21 per cent decline in its second quarter net profit to RM235 million. However, revenue gain marginally by 1 per cent during the quarter.

Its revenue has declined for the second consecutive quarters -- fell by 1.13 per cent in Q1 (against Q408), and fell by 1.06 per cent in Q2 (against Q109). In contrast, Celcom has recorded over 10 quarters of consecutive growth.

Besides those key numbers that were highlighted above, DiGi also revealed that mobile data revenue has declined on a Q-on-Q basis, mainly due to the decline in SMS revenue.

SMS Revenue declined by RM10 million, or 5.9 per cent, to RM157 million, while non-SMS revenue fell by RM3 million, or 3.7 per cent, in the second quarter. (comparing against Q109)

Few things that they did not highlight in the presentation slides:

1. How much affected are their IDD revenue? It will not be surprising to see DiGi, which is believed to have the biggest chunk of the foreign workers subscriber share, to get hit in this area.

Wednesday, July 22, 2009

AFTER returning from the Middle East, Prime Minister Datuk Seri Najib Razak said that Maxis Communications Bhd, which was privatised just over two years ago, should be relisted in the local stock exchange.

Apparently, PM has already conveyed the message to Maxis management.

If it really materialised, it will certainly make the local bourse, Bursa Malaysia, more attractive for investors. Also, for telecommunications junkies like us, we will be able to get access to Maxis's information such as quarterly revenue, subscriber growth and ARPU.

Below is the full article from Bloomberg:

By Manirajan Ramasamy and Angus Whitley

July 22 (Bloomberg) -- Maxis Communications Bhd., the Malaysian mobile-phone company bought out by T. Ananda Krishnan in 2007, should re-list in Kuala Lumpur to attract investors tothe exchange, Prime Minister Najib Razak said. Maxis, 25 percent-owned by Saudi Telecom Co., is assessing the proposal, Najib told reporters in Putrajaya, outside KualaLumpur, after returning from the Middle East this week.

“It has been conveyed to the management and they areconsidering it very seriously,” said Najib, when asked aboutinvestments stemming from his trip. “Hopefully, it will happenfairly soon.”

Ananda’s listed Malaysian assets, pay-television providerAstro All Asia Networks Plc and satellite operator Measat GlobalBhd., have surged since June on speculation Maxis may beinjected into one of the companies in order to return to thelocal market.

Maxis Chief Executive Officer Sandip Das wasn’t availableto comment, according to his secretary in Kuala Lumpur, and hedidn’t reply to an e-mail seeking a response to Najib’sstatement. A Maxis spokeswoman was unable to comment immediately.

According to speculation that surfaced in June, billionaireAnanda, ranked by Forbes as Malaysia’s second-richest person,may be seeking to fold Maxis into Astro or Measat to tap arising stock market and create a telecommunications company thatsells wireless, television and satellite services.

Maxis first sold shares in Malaysia in 2002. Before the company was taken private in June 2007, it was valued at about40 billion ringgit ($11 billion) on the Malaysian stock exchange.

On July 20, Astro issued a statement confirming it wasreviewing options to restructure, although Chief ExecutiveOfficer Ralph Marshall later told reporters a merger with Maxiswas not being considered.

Thursday, June 25, 2009

DIGI.COM Bhd, the country's third largest mobile operator, is on the attacking mode again, this time, quietly (not anymore i guess).

The company has tied up with Maybank, the country's largest lender, to attract more non-DiGi users to switch over to DiGi -- by "giving" RM35 to those who ported.

It was done rather "quietly", to avoid attention or reaction from rivals. So far, the announcement is only made on maybank2u website, and could not be found on the DiGi's website (either that, or it is not prominently displayed)

The "RM35 giveaway" is available for both prepaid and postpaid users.

I believe the campaign is quite new, as i did not notice the advertisement on maybank2u website a few days back.

We know that public's response to MNP is rather lukewarm, despite all the awareness campaigns. Will campaigns like DiGi's encourage people to switch over? We will know in November/ December when DiGi announces their Q3 results.

How will other telco react? Sit and do nothing? Offer similar packages to attract rival's customers? Or, to come up with a campaign that encourage their customer to stay loyal?

- Services is available at 200 outlets now. Plans to make the service available at 2,000 outlets by year end.

Looking at how these telcos compete on this mobile financial services area, it appears each of them has its own strength. DiGi offers the mobile remittance to 3 countries and has a "bigger" virtual wallet, allowing users to send more money in one transaction. However, DiGi charges more for each transaction.

Currently, Maxis's M-Money service can be used to purchase goods and services, while Celcom only plans to introduce such service at a later stage. M-Money can be used to remit money to Indonesia banks and GCash users in Philippines, while AirCash users can only remit money to XL users.

However, Celcom currently stands out among the rest in terms of outlets for cash-in and cash-out.

In terms of how Maxis and Celcom charges its users for the services, it appears that Maxis is charging slightly less (can't be too sure about this yet, have to read the fine prints). However, I doubt it will be the main factor that a user look at when deciding which service (DiGiREMIT, AirCash or M-Money) to sign up.

ARPU (Average revenue per user)Celcom: Postpaid ARPU at RM101, down from RM104 in fourth quarter. Prepaid ARPU at RM41, down by 8.7 per cent from RM45 in Q4 last year. Blended ARPU down by 5.4 per cent QoQ to RM54.

DiGi: Postpaid ARPU fell by 4.5 per cent to RM84 (from RM88 in fourth quarter 2008), Prepaid ARPU fell by 3.8 per cent to RM50 (RM52 in Q409) and Blended ARPU dropped by 3.4 per cent to RM56 (from RM58)

DiGi: RM544 million, grew by 1.4 per cent. Ebitda margin expanded to 44.6 per cent from 43.5 per cent.

NET PROFITCelcom: rose by 6.3 per cent QoQ to RM357 million.DiGi: fell by 2.3 per cent QoQ to RM275 million.

Main concerns moving forward:

According to industry sources, about 15-30 per cent of DiGi's prepaid customer base are foreign workers. If it is true, this could impact DiGi's earnings for the remaining quarters as the slowing economy would translate into less jobs for these foreign workers. (less jobs= less phone calls made; less activities = more foreign workers to be sent home)

As for Celcom, key question now is, how it plans to attack the Central division. It reintroduced a new Xpax few weeks ago. Based on the rates they offer, they should give rival Maxis and DiGi a run for their money.

Tuesday, May 19, 2009

Ovum, the global analyst and consulting company, issued a press release recently on trends of the telecommunication service providers.

Following are the highlights of the report, entitled Review of 4Q-CY08 telco financials, which covers 130 service providers across four regions:

1. Revenue grew 1.8 per cent year-on-year in fourth quarter 2008 to US$377.b billion. Same quarter a year ago, revenue grew by 19 per cent.

2. However, growth in operating expenses for the same period was just 1.4 per cent, and capex dropped by 2.3 per cent.

3. The decline in capex has helped increase telcos' operating cash flowmargins to 14.3 per cent in 4Q2008, from 13.2 per cent in fourth quarter 2007. Average operating cash flow margin increased in every individual region except South and Central America.

Wednesday, May 13, 2009

Tech companies, such as Google, Microsoft, IBM, Cisco and Dell, made up almost 30 per cent of the top 100 brands in the BrandZ ranking by Millward Brown Optimor. From the list, 14 brands are made up of telecommunications operator, mobile phone makers as well as telecommunications equipment manufacturers.

The brands are ranked by their dollar value. The combined value of the top 100 brands was$1.95 trillion.

Let me know if i missed out any main telecommunications players. Telco brands that didnt make it: Motorola, Samsung, LG, Sony Ericsson etc...

As for me, i am kinda surprised that Samsung didnt make it... afterall, it has made huge progress over the past few years, especially in the US.

Tuesday, April 28, 2009

MALAYSIA has become Southeast Asia's first country to commercially launch wireless high speed Internet services using WiMAX technology. WiMAX is the bigger brother to the WiFi technology, said to be able to cover bigger areas and provide faster speeds.

Being early with WiMAX is a good advantage for Malaysia as it's an added attraction to foreign investors and business travellers. But it also makes Malaysia a case study for others. In this regard, the example we're setting in implementing wireless Internet access leaves much to be desired.

Since WiMAX licences were awarded in March 2008, the government has been pressing for a fast roll-out. There were repeated warnings from former Energy, Water and Communications Minister Datuk Shaziman Mansor.

"Frankly speaking, I am just waiting for whoever that can't deliver. I want to take the licence and give it to someone who is serious to roll out," Shaziman was quoted in news reports in August last year.

Under the rules, players must commercially launch their service by the end of August 2008 and must cover 25 per cent of the population by the end of March 2009.

No doubt, the final destination - to have a nationwide coverage of the wireless services - is the most important. But the short-term target has its purpose too. It allows the regulators to monitor the progress, making sure that the players are actually doing what they are supposed to do and not just hogging the spectrum.

When the government opened bids for the WiMAX spectrum, it expected detailed business plans from players. They must have plans on how they would use the spectrum, how to cover a quarter of the population in 2009, at least 40 per cent of the country by March 2011, and so forth. On top of that, regulator Malaysian Communications and Multimedia Commission (MCMC) has the right to take action against those who do not meet the targets. This includes imposing fines, taking back the performance bond of up to RM7.7 million, as well as revoking licences.

While it is understood that all four players met the August 2008 deadline, not all met the March 2009 deadline.So far, Packet One Networks (M) Sdn Bhd, Asiaspace Sdn Bhd and REDtone International Bhd said they have either achieved or are very close to achieving the March target.

YTL e-Solutions Bhd on August 28 said it had launched services to selected businesses in the Bukit Bintang area. But it was only last Thursday that YTLE signed a deal with Samsung to start building its network.It has been more than three weeks since the March deadline expired. So far, the government or the regulator has yet to announce who have met the target. More importantly, what kind of action it plans to take against those who do not meet the requirement?

It can be a simple one like a warning letter, or a fine. Authorities can also decide not to take any action against them. The bottom line is a decision must be made, and the decision, plus the reason for it, should be communicated clearly.

Based on what has happened so far, one could fairly assume that the authorities are being lenient. This is understandable. After all, WiMAX is a fairly new technology and industry players need time to understand its true capabilities. There is also the economic slowdown factor to consider.

But this is just a guess. Maybe warning letters have been sent, fines have been slapped, exemptions have been given. The truth is the public doesn't know and they will just have to assume and speculate what is going on behind the scenes. If this is left unchecked, it could build a negative perception against the authorities.

Malaysia's effort to take the lead in technology will be a case study for many countries keen to have WiMAX. Let's hope it turns out to be a study of success.

Although the company admits that it is behind the initial target set by government "25 per cent population coverage by Q1 2009", it confidently said that it will be ahead of the government's target to achieve nationwide coverage.

It said that it will only commercially launch the service when it has nationwide coverage, as doing it stages by stages will not offer the true "customer experience".

While the idea sounds great, it does has some risks.

In 14 months time, its rivals would probably have a huge headstart in the WiMAX race. P1, which has more than 20,000 customers so far, aims to hit 100,000 by year end (need to re-clarify). By then, these players would also have already established their brand and position themselves in the market they want to be in.

These of course, are not huge obstacles for YTL e-Solutions, which has deeper pockets than the other three players (P1, Asiaspace and Redtone). Moreover, it has tied up with giants like Cisco, Sprint, and Samsung, which would definitely help the company to gain lost ground in terms of branding milleage.

In a nutshell, other motives for the sale could be due to the merger of KT Freetel and KT Corp. Selling stakes in U Mobile and/ or other "non-essential assets/ investments" will help lessen the group's burden in financing cost.

Good point!

I guess at the end of the day, if U Mobile is such a cash-cow, and brings in loads of profits, I believe the it will be more "cost efficient" for the group to get the necessary financing from banks.

I do not have the KT Freetel's regulatory filing with me. But according to the Bloomberg article:

"KT FREETEL Co, the second-largest South Korean wireless service provider, will sell a 16.5 per cent stake in U Mobile Sdn for at least US$100 million (RM360 million) to avoid losses on its investment. KT Freetel will sell the 62.6 million shares to U Mobile’s major shareholder, it said yesterday in a regulatory filing. — Bloomberg"

Sunday, April 19, 2009

Hotlink has launched another prepaid plan, this time, is specially catered to the Sabahans and Sarawakians.

The new plan came after it introduced the new prepaid plan, dubbed EXtra plan, about a week ago.

The move could be an attempt to win more market share in East Malaysia, a market which is believed to be Celcom's stronghold. (Celcom's CEO Datuk Seri Shazalli Ramly once said, it is number 1 in most parts of Malaysia, except for the Klang Valley)

The "value" they offer to the East Malaysian is obvious, 33 sen to any networks, anytime. They wont be charged 39 sen a minute if they call a non-Maxis number.

I would like to thank one of the follower Xeon for taking notice of this new plan.

Friday, April 17, 2009

Come to think of it... It has been a while since i came across a U Mobile TV commercial...

I wonder if all of U Mobile's plans are still on track, especially its network expansion plans. To recap: The firm, controlled by tycoon Tan Sri Vincent Tan Chee Yioun, plans to invest "several hundred million US dollars" over the next few years to expand its network.

Really hope U Mobile is able to brave through all difficulties, if any. Afterall, they are the only player that offers per second billing for both postpaid and prepaid lines. All the best!!

KT Freetel Co, the second-largest South Korean wireless service provider, plans to exit its investments in U-Mobile Sdn Bhd.

In its filing to regulator, KT Freetel said it will sell its entire 62.6 million shares to U-Mobile's major shareholder.

Bloomberg reports that KT Freetel plans to sell the 16.5 per cent stake for at least US$100 million to "avoid losses on its investments".

Flashback:

In December 2007, KT Freetel and Japan's NTT DoCoMo each agreed to invest US$100 million into the mobile operator, and each will take a 16.5 per cent stake.

Both "will jointly participate in U Mobile's management and draw on their 3G expertise to enhance U Mobile'scompetitiveness," a joint statement said.

Analysis:

It is never easy for a new mobile player to compete in the highly saturated market, especially when the big three players are defending their market share aggressively.

I remembered asking DiGi.Com Bhd CEO Johan Dennelind on his view on new entrants such as the MVNOs, U-Mobile etc. His reply: "I have seen a lot of adex (advertising expenditure) and share of voice, but I have seen very little impact on the revenue market share, none basically. If you count SIM cards, yeah, maybe it's noticeable. But, so far very much according to what I expected. It is very hard (for the new entrants) to come into the market, which currently has three very strong players, and many positions have been taken."

Tuesday, April 14, 2009

Since Maxis' Hotlink came up with a new price plans. No harm relooking at DiGi and Celcom's plan. So far, DiGi is still sticking to its 36 sen a minute (to anyone, anywhere in Malaysia, at 30 second block) and 10 sen a sms.

Maxis Communications Bhd's prepaid unit Hotlink has came up with new pricing structure.

Basically the deal is:

1. IF you want normal Basic Plan, you will have to pay 33/39 sen a minute, at 30 second block. Quite competitive with what others are offering.

2. IF you want 33/35 sen for the first minute, and 25/28 sen for the second minute. You will need to sign up to the EXtra plan. HOWEVER, it will be charged per 60-second block. (drop me a line at theaneu@gmail.com if you need more explanation on how these block charges can affect you)

3. IF you are a student, with a valid student ID of course, then you will be eligible for the Youth Club plan. 12/15 sen a minute, 1/5 sen an SMS.

I guess, there were people who were not happy with Hotlink's previous price plans. Before this new plan, they were offering 33 sen a minute (lowest in the industry), however, they charged it at per-60-second blocks.

Thursday, April 9, 2009

Over the past one week plus, telcos have been busy launching new products and campaigns.

Let's start with products offering:

Last Sunday, Maxis and Celcom both announced that it will be launching the new BlackBerry Storm --- the touchscreen smartphone which is expected to give Apple Inc's iPhone a run for its money.

For non-mobile operators, Packet One for example, has announced plans to launch its 10Mbps USB WiMAX dongle.

Here's the interesting part, promotional campaigns:

Early this month, DiGi is offering new campaigns to tie-up prepaid customers longer. By reloading RM10, DiGi prepaid user is entitled to RM30 worth of credit airtime. The money will be disburse to the customers in three tranches, i.e. RM10 x 3 months. So, in order to enjoy the free airtime, you got to hang on to the line.

Today, Celcom announced that it will give away one luxury handbag a day over the next 100 days.

Unlike the previous 100days 100cars campaign (launched June 2008), Celcom's CEO Datuk Seri Shazalli Ramly is confident that the campaign is "halal" and complies to regulations.

To take part in the "lucky draw", postpaid customers need to make calls between 12 noon and 7.59 pm. Each call which lasted at least three minutes will be entitled for one entry. So, if you make 10 calls, each call 3 minutes long, you will have 10 entries. However, if you made 1 call which lasted 50 minutes, it is also considered as one entry. :) So peeps, if you really want the bags really badly, hang up every 3 minutes or so.

1. RM58 a month: You will be using a 3.6Mbps modem (like most HSPA modems), unlike other telcos which offer speed on best effort basis, the company promised that those who signed up to this plan will get approx 700kbps type of speed, which i feel is a very good speed if its true. Quota: 3Gb. If exceed 3Gb, 15 sen will be charged for every 10Mb. Broadband bill will be capped at RM138. This means, you can "exceed" your quota all you want, and still dont have to pay RM500 in mobile broadband bills.

2. RM108 a month: Same modem as above. Average speed is about 700kbps (just like above). The only difference is the quota, which is at 10Gb. The RM138 cap also applies.

3. RM188 a month: You will be using a 7.2 Mbps modem. Average speed: 2Mbps!! Quota: 20Gb. If exceed quota, no additional costs. But, user may experiencce slower speed.

As we can see, DiGi is clearly competing with Celcom and Maxis on different grounds. Rivals may react by offering more quotas in future, or commit itself into stuff like "average speed" instead of the usual "best effort".

Its chief executive officer Johan Dennelind said it aims to capture 1/3 of the broadband market share. A tall order, but not an impossible task though.

With penetration rate of barely 25 per cent, anything can happen. The key now is to deliver a broadband experience that is above customers' expectations.

Intend to try out the services soon, hopefully the coverage and speed are as good as it promised.

Spoke to some of the DiGi management. Apparently, the 50Gb quota has expired, as it is only for the promotional period. Good news is that, those who signed up the package will still get the 50Gb quota.

Monday, March 16, 2009

Looks like Maxis Communications Bhd, the country's leading mobile operator, did not secure the exclusive rights for the iPhone.

So, those who complaint or not satisfied with the pricing and packages, can try waiting till the other operators offer the phone.

Just like Singapore, even though SingTel was the first to offer the iPhone, it does not stop rivals M1 and StarHub to negotiate with Apple to bring in iPhones.

At the end of the day, it all depends on whether the prices offered by Apple makes commercial sense for the Celcoms and DiGis. Subsidies will be a key issue here. How can the Celcoms and DiGis come out with a competitive price plan for the iPhone if there will be heavy subsidies?

Wednesday, March 11, 2009

THE much-awaited iPhone 3G will be officially be on sale starting next week, March 20 7.00pm to be precise.

Yup, the phone -- which sold 1 million units in 3 days, that became one of the main topic during GSM Asia Mobile Congress in Macau in November last year, and created so much attention that prompted rivals like Palm Inc, Motorola, Samsung, LG and even BlackBerry to launch their own touch-screen models -- will finally be here (officially).

So far, Maxis has a specially-designed pricing plans for these iPhone enthusiasts.

For RM100 a month, over a 24-month period, customers can get 333 minutes of voice credit, and 500MB of data credit.

For RM155 a month, customers get 666 minutes of voice credit and 1GB of data credit.

For RM250 a month, they get 1,500 minutes of voice credit and 2GB of data credit.

For RM375 a month, they get 2,500 minutes, and 3GB of data credit.

While the pricing may seem competitive, i am very disturbed over the way Maxis package the plans. As a consumer, i would prefer a surf-all-you-can type of data package, rather than 3GB or 500MB, as it would eliminate the fear of overspending.

By signing up to 1GB or 3GB plan, one would be constantly monitoring how much it is downloading, surfing... That, is not what internet experience is all about.

As for the phone's pricing, it varies. If you sign up for the RM375 a month package, you can get the 8GB iPhone 3G for free, and the 16GB version for RM260. If you sign up for the RM100 package, the 8GB phone is RM1590 while the 16GB phone is RM1890.

While it will definitely spark a lot of interest from iPhone lovers, generate loads of conversation topics, whether it will be a big hit in the country, is remain to be seen. Will those Omnia users, those who bought "modified" iPhone, sign-up to the Maxis iPhone packages? We'll find out in a few weeks' time.

Another concern is the timing of the launch...Yes, it is probably going to steal some limelight away from DiGi, which is going to launch its 3G services soon. Will the launch take the country by storm, at a time when consumers' main concerns are job security, employment, fuel costs, higher cost of living and slowing economy?

Wednesday, March 4, 2009

DON'T you love idea of per-second block? Why pay for the unused seconds? Why do we need to be charged at least 17 sen when we hung up as soon as the voice mail takes over?

Personally, I am a fan of per-second billing. It's practical.

Here's the tricky part. The only player who package their prepaid plan that way is U Mobile, the fourth largest mobile operator by subscriber base. Most of U Mobile's network is currently riding on Celcom's network. That arrangement itself will limit U Mobile's ability to compete in pricing.

Plus, being a new player in the industry, the company simply can't lower its tariff too much, as it will hurt its margin. Lower margins will eventually prolong its return of investment period.

So, on what situation we can see all players offering per-second block charges?

Here are the few scenarios:

1. Ask everyone you know, convince them to bite the bullet (for the short-term period), switch to U Mobile. If this initiative can create a storm, i.e. it has more than 3 million users by end 2009 (1 million from each operator: Maxis, Celcom, DiGi), we can be rest assured that the incumbents will offer a more attractive prepaid plan.

2. Complain. Keep complaining. Never be comfortable with what you have. Always ask for more. Write to the operators. Write letters to editors of newspaper publication. Tell them that the operators are should start offering value-for-money prepaid services, tell them that 15, 30, 45, 60 second block charges should be abolished as it confuses consumer.

Yea. You may be wondering why am I making a big fuss over block charges and all. Well, lately, a colleague of mine was surprised over her expensive phone bill. She claimed that she does not talk a lot on the phone. But, she did admit that she did make a lot of calls that went to voice mail, the thing is, she kept calling the person again and again, and the call kept goes to the voice mail.

So, she will probably be charged RM3.30 if she is on Maxis Hotlink, for 10 phone calls to a same number that went to voice mail. If she is under U Mobile, those 10 phone calls that went to voice mail (provided if she hung up within a second), would cost 8 sen.

"I hung up as soon as i heard the voice mail!" she claimed.

Well, it doesn't matter... That's how the operators make money.

Below are the rates offered by the top four players:

Celcom: at least 35 sen a minute. 30 second a block (depending who you call, where you call etc)

Sunday, March 1, 2009

In a nutshell, the country's largest fixed-line operator Telekom Malaysia Bhd announced weaker Q4 numbers, but the "bad news" was overshadowed by the 98 sen a share capital repayment.

Its sister company, TM International Bhd (soon to be known as Axiata Group Bhd), also disappointed investors, by recording a fourth quarter net loss of more than RM500 million, mainly due to the weaker ringgit and rupiah.

Even DiGi.Com Bhd, the third largest mobile player in the country, also posted weaker fourth quarter numbers. Although Q4 sales grew by 5 per cent to RM1.23 billion (Q407: RM1.18 billion), its Q4 net profit was down by 4 per cent to RM282 million. It posted RM293 million same period a year ago.

Thursday, February 12, 2009

Last week, Telekom Malaysia Bhd, the country's dominant fixed-line operator, has announced that they have no plans to cut jobs.

Yesterday, DiGi.Com Bhd, the third largest mobile operator in the country, said it also has no plans to reduce workforce. No job cut plans for both is permanent employees (about 2k of them) and contract staff (about 1k of them).

So far, no official statement by other players like U Mobile, Celcom or Maxis.

However, rumours have surfaced in the market that Maxis may have begun "outsourcing" some of its operations.... Any Maxis staff to clarify this?

Tuesday, January 27, 2009

ETISALAT Telecommunications Corp, which won a mobile spectrum in Iran via a consortium recently, said it will invest as much as US$5 billion in the country over the next five years.

The company, which won the international tender with Tamin Telecom, would spend US$1 billion on network within the first year.

Based on Wireless Intelligence's number, Iran has a mobile penetration rate of about 61 per cent, representing more than 44 million of its population.

Although being a latecomer into the Iran market, there should be plenty of growth opportunities for Etisalat. So far, the other players in the market include state-owned Iran Telecommunication Company (TCI) and Irancell, which is 49 percent owned by MTN Group.

The phone company said that the acquisition would be completed first quarter this year.

"Closing is subject to certain conditions being fulfilled, and Telenor now anticipates that closing of the transaction will take place during the first quarter of 2009," Telenor ASA said in a statement.

The company, which was expected to seal its Indian acquisition deal by end 2008, had announced last month that it would "meet the conditions" by end January 2009. It appears highly unlikely it can seal the deal before end January.

Friday, January 23, 2009

India's number one mobile operator Bharti Airtel Ltd, controlled by Tycoon Sunil Mittal and more than 30 per cent owned by Singapore Telecommunications Ltd, reported a third quarter net profit of 21.6 billion rupees (US$442 million), an increase of 26 per cent.

Its sales for the quarter, ended December 31 2008, rose to 96.3 billion rupees, against 69.6 billion same period a year ago.

Besides retaining the pole position, Bharti also managed to widen its market share, from 24.19 per cent in June to 24.69 per cent in December.

In contrast, its closest rival, Reliance Communications Ltd, lost its ground. Its market share has been eroding over the past few months, it shed marginally to 17.68 per cent, from 17.77 per cent three months ago.

Just one day after Bharti announced its third quarter numbers, Reliance told investors that its net profit grew by only 2.7 per cent to 14.1 billion rupees (US$286 million).

THE Telecom Regulatory Authority of India, just a couple of days ago, announced its December figures.

For the industry in general, it registered more than 60 million new subscribers in the second half alone. It ended the year with 346.8 million subscribers.

As expected, the top six operators remained the same, lead by Bharti Airtel (24.69%), followed by Reliance (17.68%), Vodafone Essar (17.57%), BSNL (13.33%), Idea (9.86% ) and Tata Teleservices (9.16%).

While most of the operators gained market share in the fourth quarter of 2008, there are four operators that lost market share during the quarter. They were (in no particular order):

1. Reliance -- December (17.68%) November (17.73%) October (17.75%) September (17.77%)2. Tata -- December (9.16%) November (9.23%) October (9.26%) September (9.30%)3. MTNL -- December (1.21%) November (1.22%) October (1.24%) September (1.26%)4. BSNL -- December (13.33%) November (13.47%) October (13.69%) September (13.91%)

With new player like Telenor's Unitech coming into the field this year, it will certainly put more pressure on the four players to perform better.

Thursday, January 22, 2009

THE second biggest mobile operator in Saudi Arabia Etihad Etisalat Co (Mobily) recorded a 51 per cent increase in its fourth quarter net profit.

Net profit jumped from 514 million riyals to 778 million riyals ($US207 million). Shareholders will also receive a dividend of 0.75 riyals a share.

This is in contrast with Saudi Telecom Co, the biggest phone company in the country, saw its fourth quarter net profit fell by 62 per cent, due to foreign exchange losses. Net income dropped to 1.17 billion riyals from 3.06 billion riyals a year earlier.

Wednesday, January 21, 2009

Ericsson AB, which cuts 4,000 jobs last year, plans to another round of job cuts this year, this time, about 5,000 jobs are at stake.

The company, the world's largest maker of telecommunications equipment, said the move will cost 6 billion kronor ($717 million) to 7 billion kronor. By second half of 2010, it will lead to annual savings of 10 billion kronor.

According to company's filing to the local bourse, the offer is valued at 28,554 won a share, or 2.46 trillion won (US$1.8 billion) in total.

KT Corp like most phone companies with huge fixed-line assets, are facing declines in revenue as customers are migrating from fixed to mobile.

The merger is expected to be completed on May 18.

Analysts expects the merger to create synergies and would help the company to save costs. However, not all analyst are convinced.

“It is difficult to see where the positive synergies will come from,” Jeff Kahng, an analyst at Credit Suisse Group AG, wrote in a Jan. 8 note. “We are not convinced on the merger having positive impact on bottom-line.”

Interestingly, the proposal, pending shareholders and regulatory approvals, is opposed by SK Telecom and SK Broadband, fearing that it may hurt competition in the market.

Was somewhat surprised when I came across statistics on Russian operators' performance -- not only that they announced their total subscriber base, but they also revealed the location of their customers.

CHINA Mobile Inc, the largest mobile phone company in China, posted a 24.8 per cent increase in subscriber base, to 457.25 million.

China Telecom Corp Inc, which also has fixed-line businesses, registered 208.35 million fixed-line users, of which 44.27 million users are broadband customers. Mobile customer base still far behind market leader. It has about 27.9 million users in 2008.

"This piece of news reinforces our view that earnings dilution exercises would be involved in order to de-leverage its balance sheet. Based on our estimates, an additional 200 million shares will lead to 5% earnings dilution."

Based on data compiled by Bloomberg, 8 of 22 research house placed a Buy call on TMI, another 8 recommended investors to hold on to the stocks, while the remaining 6 placed a SELL call.

Samsung Electronics Co Ltd, one of the largest company in South Korea, said has restructured itself and to streamline its businesses in light of the global economy slowdown.

The electronics giant has reorganised itself into two major divisions. Its chip and LCD units will be merged into one division, while its digital media and telecommunications units will be merged into another division.

The company also announced that executive salaries will be cut by as much as 20 per cent, and also plans to reduce employees' benefits.

It is still unclear if the Samsung will consider spinning off one of its "new" division, into a separate listing entity.

Thursday, January 15, 2009

NORTEL Networks Corp - the telephone equipment maker once worth US$250 billion at its peak - has filed for bankruptcy protection, as it continues to make losses due to competition and weakening economy.

Nortel shares, which closed at a high of C$1,231 ($987) inJuly 2000, fell 27 cents to 12 cents yesterday on the TorontoStock Exchange. A year ago, the stock closed at C$12.89. The stocks have depreciated by 99 per cent in the past year.

Some of the interesting quotes in the Bloomberg report:

“It’s the end of a saga...I’m sad to see it happen but the tears were shed many months ago,” said Benoit Lalonde, vice president of fixed income at Laurentian Bank Securities, a unit of Canada’s seventh-largest bank. Laurentian doesn’t own Nortel debt.

“This is not about the end of Nortel...This is about the beginning of a new Nortel,” Derrick Tay, the company’s lawyer, said at a hearing in Toronto.

MOTOROLA Inc, the second largest mobile phone maker in the US, is cutting 4,000 jobs, so that it can save costs to weather through tough economic times.

The announcement was barely four months since it sent 3,000 employees packing. The current initiative, plus the 3,000 job cut announcement in October, will help the company to save US$1.5 billion this year.

The company lost its pole position in the US to Korean rival Samsung last year, as it could not launch devices that attract phone users.

It aimed to regain lost ground in the segment though, by introducing a touch-screen phone to counter the ever popular iPhone, as well as to launch a "recycled" phone, to attract environmental-concious consumers.